A Free-Market Energy Blog

Remembering Julian Simon (1932–1998)

Editor note: Julian Simon is a primary inspiration for this free-market energy blog, the name of which comes from his characterization of energy as the master resource.

Twelve years ago today came the shocking news: Julian Simon, age 65, had died of heart failure after his regular morning workout in Chevy Chase, Maryland. He had undiagnosed heart disease.

Just two months before, I had visited extensively with Simon when he came Houston to give what would be his last major address, titled: “More People, Greater Wealth, Expanded Resources, Cleaner Environment.” A full house of 200 heard Simon that day, and one in attendance, free-market entrepreneur Gordon Cain, was so impressed that he mailed Simon an unsolicited $25,000 check for research.

Simon invited me to coauthor an energy paper with him for a conference he was planning. This excited me, as did his warm inscription to my first edition copy of The Ultimate Resource. After all, he was the latest major influence on me in a line of thinkers that began with Ayn Rand and had continued with Ludwig von Mises and F. A. Hayek. Not unlike other libertarians, I had gone from individualism-is-cool (Rand’s The Fountainhead) to free-markets-work (Mises’s Human Action) to the-perils-of-government-planning (Hayek, various).

I am not the only one to list Simon alongside other top classical liberal/libertarian scholars. Don Boudreaux, chair of the department of economics at George Mason University, wrote:

The three scholars who have had the the greatest impact on my own thinking are F. A. Hayek, James Buchanan, and Julian Simon…. [Simon’s] vital idea of “the ultimate resource” … is one of the most profound—and least understood—in all of the social sciences.

Hayek, in fact, credited Julian Simon for having crystallized the big picture for him and wrote a self-described “fan letter” to him in 1981.

Dear Professor Simon,

I have never before written a fan letter to a professional colleague, but to discover that you have in your Economics of Population Growth provided the empirical evidence for what with me is the result of a life-time of theoretical speculation, is too exciting an experience not to share it with you. The upshot of my theoretical work has been the conclusion that those traditional rules of conduct (esp. of several property) which led to the greatest increases of the numbers of the groups practicing them leads to their displacing the others — not on “Darwinian” principles but because based on the transmission of learned rules — a concept of evolution which is much older than Darwin.

I doubt whether welfare economics has really much helped you to the right conclusions. I claim as little as you do that population growth as such is good — only that it is the cause of the selection of the morals which guide our individual action. It follows, of course, that our fear of a population explosion is unjustified so long as the local increases are the result of groups being able to feed larger numbers, but may become a severe embarrassment if we start subsidizing the growth of groups unable to feed themselves.

Sincerely, F. A.Hayek

Hayek wrote a second letter upon reading The Ultimate Resource:

Dear Professor Simon,

… I have now at last had time to read [The Ultimate Resource] with enthusiastic agreement. So far as practical effect is concerned it ought to be even more important than your theoretical work which I found so exciting because it so strongly supports all the conclusions of the work I have been doing for the last few years. I do not remember whether I explained in my earlier letter that one, perhaps the chief thesis of the book on The Fatal Conceit, the first draft of which I got on paper during the past summer, is that the basic morals of property and honesty, which created our civilization and the modern numbers of mankind, was the outcome of a process of selective evolution, in the course of which always those practices prevailed, which allowed the groups which adopted them to multiply more rapidly (mostly at their periphery among people who already profited from them without yet having fully adopted them.) That was the reason for my enthusiasm for your theoretical work.

Your new book I welcome chiefly for the practical effects I am hoping from it. Though you will be at first much abused, I believe the more intelligent will soon recognize the soundness of your case. And the malicious pleasure of being able to tell most of their fellows what fools they are, should get you the support of the more lively minds about the media. If your publishers want to quote me they are welcome to say that I described it as a first class book of great importance which ought to have great influence on policy….

Sincerely, F. A. Hayek

Two Tributes: Ben Wattenberg and Stepehn Moore

Two tributes to Simon upon his passing are worth rereading. One was published in the Wall Street Journal by close friend Ben Wattenberg; the other (longer) piece is by Simon’s pupil-made-good (and the 1st winner of the Julian Simon Memorial Award), Stephen Moore. I reproduce both below, as well as the New York Times obituary on Simon.

Julian Simon, who waged intellectual war on environmentalists and Malthusians, died suddenly on Sunday. He would have been 66 tomorrow, the day of his funeral.

Simon could sometimes glow like an exposed wire, crackling with nervous intellectual intensity. Privately, he had a soul of purest honey. But by force of will, fueled by his sizzling energy, Simon helped push a generation of Americans to rethink their views on population, resources and the environment. By now it is clear that in this task he was largely successful. As the years roll on he will be more successful yet, his work studied, and picked at, by regiments of graduate students.

His keystone work was “The Ultimate Resource,” published in 1981 and updated in 1996 as “The Ultimate Resource 2″ (Princeton University Press). Its central point is clear: Supplies of natural resources are not finite in any serious way; they are created by the intellect of man, an always renewable resource. Coal, oil and uranium were not resources at all until mixed well with human intellect.

The notion drove some environmentalists crazy. If it were true, poof!–there went so many of the crises that justified their existence. From their air-conditioned offices in high-rise buildings, they brayed: Simon believes in a technological fix! The attacks often got personal: Simon’s doctorate was in business economics, they sniffed; he had merely been a professor of advertising and marketing, and–get this–he had actually started a mail-order business and written a book about how to do it. Never mind that he also studied population economics for a quarter century.

In fact, it was Simon’s knowledge of real-world commerce that gave him an edge in the intellectual wars. He knew firsthand about some things that many environmentalists had only touched gingerly, like prices. If the real resource was the human intellect, Simon reasoned, and the amount of human intellect was increasing, both quantitatively through population growth and qualitatively through education, then the supply of resources would grow, outrunning demand, pushing prices down and giving people more access to what they wanted, with more than enough left over to deal with pollution and congestion. In short, mankind faced the very opposite of a crisis.

Simon rarely presented a sentence not supported by facts–facts arranged in serried ranks to confront the opposition; facts about forests and food, pollution and poverty, nuclear power and nonrenewable resources; facts used as foot soldiers to strike blows for accuracy.

In a famous bet, gloom-meister Paul Ehrlich took up Simon’s challenge and wagered that between 1980 and 1990 scarcity would drive resource prices up. Simon bet that progress would push prices down. Simon won the bet, easily. Mr. Ehrlich won a MacArthur Foundation “genius” grant. But the wheel turns, and we’ll see who’s a genius. Fortune magazine listed Simon among “the world’s most stimulating thinkers.” Mr. Ehrlich didn’t make the cut.

Simon sensed the primacy of something else that many environmentalists and crisis-mongers didn’t catch on to for a quite a time: Human intellect could best be transformed into beneficial goods and services in an atmosphere of political and economic liberty. At the United Nations’ Mexico City population conference in 1984 Simon winced, and counterattacked, when population alarmists caricatured the Reagan-appointed American delegation as promoting the idea that “capitalism is the best contraceptive.” It was not a good idea to ridicule capitalism, or free markets, or human liberty, in Simon’s presence.

Of course, rising living standards do tend to depress fertility. Living standards do rise faster under democratic market systems. Smart folks now know that the fruits of economic growth can be used to diminish pollution. You don’t hear much anymore about how we’re running out of everything. (Next task: Simonize the Global Warmists.)

Finally, unlike many of his opponents, Julian was a traditionalist. He did not work on the Sabbath, and the Friday Sabbath dinner at the Simon house was always a gentle and joyous celebration.

At rest on the Sabbath, Julian was indefatigable the rest of the week, chasing his precious facts. If Thomas Malthus is in heaven, he’s in for an argument, laced with facts, facts, facts.

Julian L. Simon, professor of business administration at the University of Maryland and distinguished senior fellow at the Cato Institute, died February 8 at the age of 65. Stephen Moore, his former research assistant, is director of fiscal policy studies at the Cato Institute.

I first met “doom-slayer” Julian L. Simon at the University of Illinois in the spring of 1980—at just the time when the environmental doomsday industry had reached the height of its influence and everyone knew the earth was headed to hell in a hand basket. We could see the signs right before our very eyes. We had just lived through a decade of gasoline lines, Arab oil embargoes, severe food shortages in the Third World, nuclear accidents, and raging global inflation. Almost daily the media were reporting some new imminent eco-catastrophe: nuclear winter, ozone depletion, acid rain, species extinction, and the death of the forests and oceans.

The Club of Rome had just released its primal scream, Limits to Growth, which reported that the earth was rapidly running out of everything. The most famous declinist of the era, biologist Paul Ehrlich, had appeared on the Tonight Show with Johnny Carson to fill Americans with fear of impending world famine and make gloomy prognostications, such as, “If I were a gambler, I would bet even money that England will not exist in the year 2000.”

The Carter administration published in 1980 its multiagency assessment of the earth’s future, titled Global 2000. Its famous doom-and-gloom forecast that “the world in 2000 will be more crowded, more polluted, less stable ecologically. . . . and the world’s people will be poorer in many ways than they are today” received headlines across the nation. Malthusianism was now the official position of the U.S. government.

It was all so damned depressing. And, thanks to iconoclast Julian Simon, we now know that it was all so wrong.

It was back in the midst of that aura of gloom that by chance I enrolled in Simon’s undergraduate economics course at the University of Illinois. After the first week of the course, I was convinced that his multitude of critics were right. He must be a madman. How could anyone believe the outlandish claims he was making? That population growth was not a problem; that natural resources were becoming more abundant; that the condition of the environment was improving. That the incomes of the world’s population were rising. Simon made all of those bold proclamations and more in his masterpiece The Ultimate Resource, published in 1980. I read the book over and over—three times, in fact—and I came to the humbling realization that everything I had been taught since the first grade about population and environmental issues had been dead wrong.

The weight of the facts that Simon brought to bear against the doomsayers was simply so overpoweringly compelling that I, like so many others, became a Julian Simon fanatic. Julian was the person who brought me to Washington in 1982 to work as his research assistant as he finished his next great book (coedited with the late futurist Herman Kahn of the Hudson Institute) titled The Resourceful Earth: A Response to Global 2000.

So for more than 15 years I was privileged to occupy a front-row seat from which I watched as Simon thoroughly and often single-handedly capsized the prevailing Malthusian orthodoxy. He routed nearly every prominent environmental scaremonger of our time: from the Club of Rome, to Paul Ehrlich, to Lester Brown, to Al Gore. (After reading Earth in the Balance, Julian was convinced that Gore was one of the most dangerous men and one of the shallowest thinkers in all of American politics.)

Simon’s dozens of books and his more than 200 academic articles always brought to bear a vast arsenal of compelling data on and analysis of how life on earth was getting better, not worse. Simon argued that we were not running out of food, water, oil, trees, clean air, or any other natural resource because throughout the course of human history the price of natural resources had been declining. Falling long-term prices are prima facie evidence of greater abundance, not increasing scarcity. He showed that, over time, the environment had been getting cleaner, not dirtier. He showed that the “population bomb” was a result of a massive global reduction in infant mortality rates and a stunning increase in life expectancy. “If we place value on human life,” Simon argued, “then those trends are to be celebrated, not lamented.”

Simon’s central premise was that people are the ultimate resource. “Human beings,” he wrote, “are not just more mouths to feed, but are productive and inventive minds that help find creative solutions to man’s problems, thus leaving us better off over the long run.” As Ben Wattenberg of the American Enterprise Institute explained in his brilliant tribute to Simon in the Wall Street Journal, “Simon’s central point was that natural resources are not finite in any serious way; they are created by the intellect of man, an always renewable resource.” Julian often wondered why most governmental economic and social statistics treat people as if they are liabilities not assets. “Every time a calf is born,” he observed, “the per capita GDP of a nation rises. Every time a human baby is born, the per capita GDP falls.” Go figure!

The two trends that Simon believed best captured the long-term improvement in the human condition over the past 200 years were the increase in life expectancy and the decline in infant mortality (see figures). Those trends, Simon maintained, were the ultimate sign of man’s victory over death.

Today, many of Julian Simon’s views on population and natural resources are so triumphant that they are almost mainstream. No one can rationally look at the evidence today and still claim, for example, that we are running out of food or energy. But those who did not know Julian or of his writings in the 1970s and early 1980s cannot fully appreciate how viciously he was attacked—from both the left and the right. Paul Ehrlich once snarled that Simon’s writings proved that “the one thing the earth will never run out of is imbeciles.” A famous professor at the University of Wisconsin wrote, “Julian Simon could be dismissed as a simpleminded nut case, if his ideas weren’t so dangerous.”

To this day I remain convinced that the endless ad hominem attacks were a result of the fact that—try as they would—Simon’s critics never once succeeded in puncturing holes in his data or his theories. What ultimately vindicated his theories was that the doomsayers’ predictions of global famine, $100 a barrel oil, nuclear winter, catastrophic depletion of the ozone layer, falling living standards, and so on were all discredited by events. For example, the year 2000 is almost upon us, and we can now see that the direction in which virtually every trend of human welfare has moved has been precisely the opposite of that predicted by Global 2000. By now Simon and Kahn’s contrarian conclusions in The Resourceful Earth look amazingly prescient.

The ultimate embarrassment for the Malthusians was when Paul Ehrlich bet Simon $1,000 in 1980 that five resources (of Ehrlich’s choosing) would be more expensive in 10 years. Ehrlich lost: 10 years later every one of the resources had declined in price by an average of 40 percent.

Julian Simon loved good news. And the good news of his life is that, today, the great bogeyman of our time, Malthusianism, has, like communism, been relegated to the dustbin of history with the only remaining believers to be found on the faculties of American universities. The tragedy is that it is the Paul Ehrlichs of the world who still write the textbooks that mislead our children with wrongheaded ideas. And it was Paul Ehrlich, not Julian Simon, who won the MacArthur Foundation’s “genius award.”

Among the many prominent converts to the Julian Simon world view on population and environmental issues were Ronald Reagan and Pope John Paul II. Despite howls of protest from the international population control lobby, in 1984 the Reagan administration adopted Simon’s position—that the world is not overpopulated and that people are resource creators, not resource destroyers—at the United Nations Population Conference in Mexico City. The Reaganites called it “supply-side demographics.” Meanwhile, in the late 1980s, Simon traveled by invitation to the Vatican to explain his theories on population growth. A year later Pope John Paul II’s encyclical letter urged nations to treat their people “as productive assets.”

Simon’s theory about the benefits of people also led him to write extensively about immigration. In 1989 he published The Economic Consequences of Immigration, which argued that immigrants make “substantial net economic contributions to the United States.” His research in the 1980s showed that, over their lifetimes, immigrants on balance pay thousands of dollars more in taxes than they use in government services, making them a good investment for native-born Americans. It was arguably the most influential book on U.S. immigration policy in 25 years. Sen. Spencer Abraham (R-Mich.), chairman of the Immigration Subcommittee, has credited Simon’s work with helping “keep wide open America’s gates to immigrants.”

We at the Cato Institute published three of Julian Simon’s books and dozens of his articles and studies. We were always drawn to his celebration of the individual. Simon believed that human progress depended not only on creative and ingenious minds but also on free institutions. He often marveled that the only place on earth where life expectancy actually fell in the 20th century was in the Soviet Union and other East European nations during the tyranny of communism. Many of his most ardent critics were government activists who believe that the only conceivable solution to impending eco-catastrophe is ever more stringent governmental edicts: coercive population stabilization policies, gas rationing, wage and price controls, mandatory recycling, and so on.

Julian had an ebullient spirit, but from time to time he would complain to me that his writings never received the full recognition they deserved from academics. That was probably true, but I always reminded him that his work had had a more profound impact on the policy debate in Washington than that of any random selection of 100 of his academic peers combined.

Two weeks before Julian died, I was driving through central Iowa and was surprised and delighted to find gasoline selling for 89 cents a gallon. I hadn’t seen gas prices that low since before the OPEC embargo in the early 1970s. I instantly thought of Julian. It was one of those little real-world events that confirm that he was right all along.

New York Times Obituary “Julian Simon, 65, Optimistic Economist, Dies” by Kenneth Gilpin, February 12, 1998

Julian L. Simon, an economist and professor who spent much of his professional life taking on scientists, demographers and other academics who argued that mankind was stretching the resources of the earth to the breaking point, died at his home in Chevy Chase, Md., on Sunday.

The cause of death was a heart attack, his son, David, said. Mr. Simon was 65.

At the time of his death, Mr. Simon was a professor of business administration at the University of Maryland and a senior fellow at the Cato Institute, a conservative Washington research organization. And his views, generally optimistic about the benefits humans bring to the planet and about man’s prospects for the future, were widely debated.

The essence of Mr. Simon’s view of man and the future is contained in two predictions for the next century and any century thereafter that are in ”The State of Humanity,” a book he edited for the Cato Institute.

”First,” he wrote, ”humanity’s condition will improve in just about every material way. Second, humans will continue to sit around complaining about everything getting worse.”

He argued that mankind would rise to any challenges and problems by devising new technologies to not only cope, but thrive. ”Whatever the rate of population growth is, historically it has been that the food supply increases at least as fast, if not faster,” he said in a profile published in Wired magazine last year.

Mr. Simon’s views were widely contested by a large coterie of the academic and scientific community, many of whose members believe that more people create more problems, straining the earth and its resources in the process.

”Most biologists and ecologists look at population growth in terms of the carrying capacity of natural systems,” said Lester R. Brown, president of the Worldwatch Institute in Washington. ”Julian was not handicapped by being either. As an economist, he could see population growth in a much more optimistic light.”

In 1980, for example, Mr. Simon and Herman Kahn, the futurist, headed a panel organized by the conservative Heritage Foundation that took sharp issue with findings of the Global 2000 Report, a study issued by the Carter Administration.

Among other things, the report said that ”if present trends continue, the world in 2000 will be more crowded, more polluted, less stable ecologically and more vulnerable to disruption than the world we live in now.”

At the time Mr. Simon was an economics professor at the University of Illinois. But he had been researching and writing about the positive effects of population growth since 1965, when he saw a headline in The New York Times warning of a population doomsday.

”Fortunately for this planet,” Mr. Simon said in response to the Global 2000 Report, ”these gloomy assertions about resources and environment are baseless.”

Mr. Simon’s sunny view of the future became the basis for a highly publicized bet in 1980 with Paul R. Ehrlich, the Stanford University ecologist whose 1968 book, ”The Population Bomb,” predicted that one-fifth of humanity would starve to death by 1985.

Mr. Ehrlich and two colleagues from the University of California at Berkeley were piqued by an article Mr. Simon wrote for Science magazine titled ”Resources, Population, Environment: An Oversupply of False Bad News.” They responded to a challenge by Mr. Simon to Malthusians that the price of any natural resource would be lower by a mutually agreed-upon date, not higher.

Mr. Ehrlich and his colleagues took the bet on the belief that rising demand for raw materials by an exploding global populace would pare supplies of nonrenewable resources, driving up prices. Mr. Ehrlich said he had accepted Mr. Simon’s ”astonishing offer before other greedy people jump in.”

The Ehrlich group bet $1,000 on five metals — chrome, copper, nickel, tin and tungsten — in quantities that each cost $200 in October 1980, when the bet was made. Mr. Simon agreed that he would sell the agreed-upon quantities of the metals to the Ehrlich group 10 years later at 1980 prices. If the combined prices of acquiring the metals in 1990 turned out to be higher than $1,000, Mr. Simon would pay the difference in cash. If prices fell, the Ehrlich group would pay him.

During the decade, the world’s population grew by more than 800 million, the greatest increase in history, and the store of metals did not get any larger. Yet in the fall of 1990, with the prices of the metals down sharply, Mr. Ehrlich mailed Mr. Simon a check for $576.07.

Mr. Simon wrote back a thank you note, along with a challenge to raise the wager to as much as $20,000, tied to any other resources and to any other year in the future. Mr. Ehrlich declined to take him up on the new offer.

Born in Newark, Mr. Simon studied psychology as an undergraduate at Harvard University, then earned an M.B.A. and a doctorate in business economics at the University of Chicago. He joined the faculty at the University of Illinois in 1963.

Much of his early work was in mail order marketing — his book on the topic, ”How to Start and Operate a Mail Order Business,” sold more books than any he wrote subsequently. But his attention turned to population questions after he heard the grim predictions about an overpopulated planet.

Despite his optimism about the future of mankind, Mr. Simon was given to personal bouts of depression. As a form of therapy he wrote a book on the subject, ”Good Mood: The New Psychology for Overcoming Depression.”

An active lecturer, Mr. Simon’s view of the world and man’s possibilities never wavered.

”He believed that the world needs problems because they make us better,” said Robert L. Bradley Jr., president of the Institute for Energy Research in Houston. ”Problems make us better off than if they had never occurred.”

Mr. Simon is survived by his wife, Rita James Simon of Chevy Chase; three children, David M. Simon of Chicago, Judith Simon Garret of Vienna, Va., and Daniel H. Simon of Laurel, Md., and one grandchild.